Question 1

In perfect competition as well as in monopolistic competition,

Accepted Answer

A)   marginal revenue is equal to price for each firm.
B)   profit is positive in a long-run equilibrium for each firm.
C)   entry and exit by firms are restricted.
D)   there are many firms in a single market.E) A) and B)
F) All of the above

Question 2

Table 16-3
The following table shows the output produced by each of the top eight firms in four industries as well as the total industry output for those industries.
 
-Refer to Table 16-3.Based on the concentration ratio,which industry is the most competitive?

Accepted Answer

A)   Industry A
B)   Industry B
C)   Industry C
D)   Industry DE) A) and D)
F) A) and B)

Question 3

Table 16-2
The following table shows the total output produced by the top six firms as well as the total industry output for each industry.
 
-Refer to Table 16-2.Which industry has the highest concentration ratio?

Accepted Answer

A)   Industry A
B)   Industry B
C)   Industry C
D)   Industry DE) B) and C)
F) A) and D)

Question 4

If advertising reduces a consumer's price sensitivity between identical goods,it is likely to

Accepted Answer

A)   increase the elasticity of demand for differentiated products.
B)   enhance competition and encourage more product diversity.
C)   reduce competition and reduce social welfare.
D)   encourage the consumption of all homogenous goods.E) B) and C)
F) All of the above

Question 5

Television advertisements aired during major sporting events are very expensive.A theory asserting that people buy a product simply because it is advertised would suggest that information on the high cost of advertising

Accepted Answer

A)   enhances the effectiveness of the advertisement.
B)   reduces people's willingness to purchase advertised products.
C)   is leaked to discredit the firms that spend so much on advertising.
D)   reduces the effective staying power of a product.E) All of the above
F) B) and D)

Question 6

The product-variety externality states the benefits to consumers from the introduction of a new product.

Accepted Answer

A) True 
 B)False

Question 7

The administrative burden of regulating price in a monopolistically competitive market is

Accepted Answer

A)   small due to economies of scale.
B)   large because price is usually below marginal cost.
C)   large because of the large number of firms that produce differentiated products.
D)   small because firms produce with excess capacity.E) B) and C)
F) A) and D)

Question 8

A firm produces the welfare-maximizing level of output

Accepted Answer

A)   only when the market is perfectly competitive.
B)   only when the market is a monopoly or monopolistically competitive.
C)   only when the market is monopolistically competitive or perfectly competitive.
D)   when the market is perfectly competitive,monopolistically competitive,or monopolistic.E) B) and C)
F) A) and B)

Question 9

Table 16-1
The following table shows the percentage of output supplied by the top eight firms in four different industries.
 
-Refer to Table 16-1.Which industry is the most competitive?

Accepted Answer

A)   Industry W
B)   Industry X
C)   Industry Y
D)   Industry ZE) C) and D)
F) All of the above

Question 10

When a firm operates at efficient scale,it is producing at the minimum point on its average total cost curve.

Accepted Answer

A) True 
 B)False

Question 11

The product-variety externality is associated with the

Accepted Answer

A)   producer surplus that accrues to incumbent firms in a monopolistically competitive industry.
B)   loss of consumer surplus from exposure to additional advertising.
C)   consumer surplus that is generated from the introduction of a new product.
D)   opportunity cost of firms exiting a monopolistically competitive industry.E) B) and D)
F) A) and B)

Question 12

Figure 16-2 
-Refer to Figure 16-2.If this firm profit-maximizes,how much revenue will it earn?

Accepted Answer

The answer of Figure 16-2 
-Refer to Figure 16-2.If this...

Question 13

The two types of imperfectly competitive markets are

Accepted Answer

A)   markets with differentiated products and monopoly.
B)   markets with differentiated products and oligopoly.
C)   oligopoly and monopoly.
D)   monopolistic competition and oligopoly.E) None of the above
F) All of the above

Question 14

One thing that both critics of advertising and defenders of advertising agree on is that advertising fosters competition.

Accepted Answer

A) True 
 B)False

Question 15

Figure 16-2
This figure depicts a situation in a monopolistically competitive market. 
-Refer to Figure 16-2.At the profit-maximizing level of output,what is this firm's total cost of production?

Accepted Answer

A)   $1,200
B)   $1,400
C)   $1,600
D)   $1,875E) A) and C)
F) None of the above

Question 16

A firm in a monopolistically competitive market faces a

Accepted Answer

A)   downward-sloping demand curve because the firm's product is different from those offered by other firms.
B)   downward-sloping demand curve because there are only a few firms in the market.
C)   horizontal demand curve because there are many firms in the market.
D)   horizontal demand curve because firms can enter the market without restriction.E) B) and D)
F) B) and C)

Question 17

Defenders of advertising argue that it is not rational for profit-maximizing firms to spend money on advertising for products that have

Accepted Answer

A)   superior quality.
B)   inferior or mediocre quality.
C)   low prices.
D)   limited availability.E) A) and B)
F) None of the above

Question 18

Use a graph to demonstrate why a profit-maximizing monopolistically competitive firm must operate at excess capacity.Explain why a perfectly competitive firm is not subject to the same constraint.

Accepted Answer

<img  loading="lazy" src="/assets/images/blured-textbook.svg" class="d-inline m-1" alt="blured image" width="139" height="30"> Competitive firms do not face downward-...

Question 19

Which of the following conditions distinguishes monopolistic competition from perfect competition?

Accepted Answer

A)   the number of sellers in the market
B)   the freedom of entry and exit by firms in the market
C)   the size of firms in the market
D)   product differentiationE) All of the above
F) A) and D)

Question 20

Table 16-7
A monopolistically competitive firm faces the following demand schedule for its product.In addition,the firm has total fixed costs equal to $10.
 
-Refer to Table 16-7.If the firm has a constant marginal cost of $5 per unit,which of the following would you expect to occur in the long run in this market?

Accepted Answer

A)   New firms will enter the market and profits for firms in the market will fall.
B)   New firms will enter the market and profits for firms in the market will rise.
C)   Firms will leave the market and profits for firms that remain in the market will rise.
D)   Firms will leave the market and profits for firms that remain in the market will fall.E) A) and B)
F) B) and D)

Exam 16: Monopolistic Competition

Figure 16-2 This figure depicts a situation in a monopolistically competitive market. -Refer to Figure 16-2.At the profit-maximizing level of output,what is this firm's total cost of production?

Correct Answer
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In perfect competition as well as in monopolistic competition,

Correct Answer
verified

If advertising reduces a consumer's price sensitivity between identical goods,it is likely to

Correct Answer
verified

Figure 16-2 -Refer to Figure 16-2.If this firm profit-maximizes,how much revenue will it earn?

Correct Answer
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The two types of imperfectly competitive markets are

Correct Answer
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One thing that both critics of advertising and defenders of advertising agree on is that advertising fosters competition.

Correct Answer
verified

Table 16-3 The following table shows the output produced by each of the top eight firms in four industries as well as the total industry output for those industries. -Refer to Table 16-3.Based on the concentration ratio,which industry is the most competitive?

Correct Answer
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The product-variety externality is associated with the

Correct Answer
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A firm in a monopolistically competitive market faces a

Correct Answer
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Table 16-1 The following table shows the percentage of output supplied by the top eight firms in four different industries. -Refer to Table 16-1.Which industry is the most competitive?

Correct Answer
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Use a graph to demonstrate why a profit-maximizing monopolistically competitive firm must operate at excess capacity.Explain why a perfectly competitive firm is not subject to the same constraint.

Correct Answer
verified
Competitive firms do not face downward-...
View Answer

Television advertisements aired during major sporting events are very expensive.A theory asserting that people buy a product simply because it is advertised would suggest that information on the high cost of advertising

Correct Answer
verified

The product-variety externality states the benefits to consumers from the introduction of a new product.

Correct Answer
verified

The administrative burden of regulating price in a monopolistically competitive market is

Correct Answer
verified

A firm produces the welfare-maximizing level of output

Correct Answer
verified

Defenders of advertising argue that it is not rational for profit-maximizing firms to spend money on advertising for products that have

Correct Answer
verified

Correct Answer
verified

Which of the following conditions distinguishes monopolistic competition from perfect competition?

Correct Answer
verified

When a firm operates at efficient scale,it is producing at the minimum point on its average total cost curve.

Correct Answer
verified

Table 16-2 The following table shows the total output produced by the top six firms as well as the total industry output for each industry. -Refer to Table 16-2.Which industry has the highest concentration ratio?

Correct Answer
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Exam 16: Monopolistic Competition

Figure 16-2 This figure depicts a situation in a monopolistically competitive market. -Refer to Figure 16-2.At the profit-maximizing level of output,what is this firm's total cost of production?

Correct AnswerverifiedShow Answer

In perfect competition as well as in monopolistic competition,

Correct AnswerverifiedShow Answer

If advertising reduces a consumer's price sensitivity between identical goods,it is likely to

Correct AnswerverifiedShow Answer

Figure 16-2 -Refer to Figure 16-2.If this firm profit-maximizes,how much revenue will it earn?

Correct AnswerverifiedShow Answer

The two types of imperfectly competitive markets are

Correct AnswerverifiedShow Answer

One thing that both critics of advertising and defenders of advertising agree on is that advertising fosters competition.

Correct AnswerverifiedShow Answer

Table 16-3 The following table shows the output produced by each of the top eight firms in four industries as well as the total industry output for those industries. -Refer to Table 16-3.Based on the concentration ratio,which industry is the most competitive?

Correct AnswerverifiedShow Answer

The product-variety externality is associated with the

Correct AnswerverifiedShow Answer

A firm in a monopolistically competitive market faces a

Correct AnswerverifiedShow Answer

Table 16-1 The following table shows the percentage of output supplied by the top eight firms in four different industries. -Refer to Table 16-1.Which industry is the most competitive?

Correct AnswerverifiedShow Answer

Use a graph to demonstrate why a profit-maximizing monopolistically competitive firm must operate at excess capacity.Explain why a perfectly competitive firm is not subject to the same constraint.

Correct Answerverified Competitive firms do not face downward-...View AnswerShow Answer

Television advertisements aired during major sporting events are very expensive.A theory asserting that people buy a product simply because it is advertised would suggest that information on the high cost of advertising

Correct AnswerverifiedShow Answer

The product-variety externality states the benefits to consumers from the introduction of a new product.

Correct AnswerverifiedShow Answer

The administrative burden of regulating price in a monopolistically competitive market is

Correct AnswerverifiedShow Answer

A firm produces the welfare-maximizing level of output

Correct AnswerverifiedShow Answer

Defenders of advertising argue that it is not rational for profit-maximizing firms to spend money on advertising for products that have

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which of the following conditions distinguishes monopolistic competition from perfect competition?

Correct AnswerverifiedShow Answer

When a firm operates at efficient scale,it is producing at the minimum point on its average total cost curve.

Correct AnswerverifiedShow Answer

Table 16-2 The following table shows the total output produced by the top six firms as well as the total industry output for each industry. -Refer to Table 16-2.Which industry has the highest concentration ratio?

Correct AnswerverifiedShow Answer

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Competitive firms do not face downward-...
View Answer

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